Alapaty Ramamoorthy and others vs Polisetti Satyanarayana

Krishna Rao, J.—These three appeals have been preferred respec(sic)y by the plaintiff, by the 1st defendant and! defendants 2 and 4 and arise out of the plaintiff suit to recover Rs. 10,192-9-0 from the defendants, which has been decreed in part by the (sic)r Court. The plaintiff is a registered firm (sic)g business at Vijayawada under the name style ''Alapati Ramamurthy Gelli Krishna-(sic)hy.'' The 1st defendant is a businessman at same place and defendants 2 to 4, who are hants residing at Guntur, Rajampet and (sic)awada respectively, are alleged in the (sic)t to be the 1st defendant''s confederates.

The 3rd defendant died during the pendency the suit and defendants 5 to 8 are his legal (sic)sentatives. The claim for Rs. 10,192/9/0 1st defendants 1 to 4 falls under three heads Rs. 5,840-10-0 being the price of 25 bales of (sic)ies purchased by the 1st defendant from plaintiff and delivered to him on 22-4-1946: Rs. 2,625/- being the total of the damages reach of contract by non-delivery of goods (sic)r four contracts of sale of gunnies entered between the plaintiff and defendants 1 to 4 (sic)ctively on 4-4-1946 and (3) interest at r(sic) cent per annum on the aforesaid amounts the date of the suit.

The plaintiffs case was that although the contracts mentioned under the second head were entered into in the names of defendants I to 4 respectively the real contracting party was the 1st defendant alone and defendants 2 to 4 were merely name-lenders. On this allegation, he. asked for a decree for the entire amount of the damages in respect of all the four contracts, together with interest, against the 1st defendant and for Rs. 750/-, Rs. 562-8-0 and Rs. 562-8-0 out of the amount, together with interest, in respect of 3 of the contracts against the respective defendants 2 to 4 jointly and severally with the 1st defendant. The only defence of the 1st defendant as regards Rs. 5,840-10-0 under the first head which was claimed from him alone was that he made a payment of Rs. 3,300/- on 7-4-1946 which the plaintiff had not given credit to.

He admitted his liability for the balance and deposited Rs. 2,863/- in the lower Court during the pendency of the suit as the amount due from him inclusive of interest As regards the second head of the claim, the defendants denied that defendants 2 to 4 were name-lenders for the 1st defendant and asserted that defendants 1 to 4 were the respective contracting parties under the four contracts. Their defence, so far as it is material to "these appeals, was that they were under no obligation to deliver the goods as the plaintiff did not demand or offer to take delivery and that the plaintiff! himself had therefore committed breach of the contracts. The learned Sub-ordinate Judge accepted the contentions of the defendants as regards the 1st defendant''s payment of Rs. 3,300/- and as regards defendants 1 to 4 being severally liable under their four respective contracts.

But he held that in view of the letters admittedly passed by the plaintiff to the defendants in respect of the four contracts, on the same terms as Ex. B-1 passed to the 4th defendant, there was no obligation on the part of the plaintiff to demand delivery and that defendants are liable to pay damages at the rate of Rs. 2-8-0 per bale of gunnies as claimed in the plaint He also upheld the plaintiffs claim based on trade custom for interest at 12 per cent, per annum till the date of the suit.

On these findings, he decreed the suit against defendants 1, 2 and 4 and the estate of the 3rd defendant in the hands of defendants 5 to 8 for Rs. 3,713/- (Rs. 2,863/- plus 850/-) Rs. 850/-Rs. 637-8-0 and Rs. 637-8-0 respectively, together with subsequent interest at six per cent, and proportionate costs.

In the plaintiffs appeal, the dispute is confined to the first head of his claim and interest thereon till the date of the suit The plaintiffs contention is that the lower Court erred in giving credit to the payment of Rs. 3,300/- made by the 1st defendant on 7-4-1946, because it was a payment not to the plaintiff firm but to a different firm known as ''Alapati Ramamurty Gelli Krishnamurty and Co. It is stated by the plaintiffs learned Counsel, without contradiction although no evidence was adduced on the point at the trial, that only five of the partners were common to the two firms and that the sixth partner of each is different.

The 1st defendant raised no dispute as to the fact that the plaintiff firm styled ''Alapati Ramamurty Gelli Krishnamurthy'' is different from the firm styled ''Alapati Ramamurthy Gelli Krishnamurthy and Co.'' His case was merely that he became aware of this fact only after the present suit was filed on 8-4-1948. He had been dealing with both the firms under the impression that there was only one firm, Alapati Ramamurthy Gelli Krishnamurthy and Co., and was maintaining a single khata under the head ''Alapati Ramamurthy Gelli Krishnamurty and Co.'' for all the dealings. But after the institution of the present suit, he separated on 1-7-1948, the items relating to the plaintiff firm and accordingly contends that the payment of Rs. 3,300/-011 7-4-1946 goes along with his liability for Rs. 5,840-10-0 incurred on 22-4-1946.

The learned Subordinate Judge did not believe the 1st defendants story that he became aware of the existence of the two different firms only after the institution of the present suit The reason was the 1st defendant himself admitted in his evidence that he entered into contracts in the names of both the firms. However, on a careful consideration of the entries in the day-book and the ledger of the 1st defendant, which the parties have not placed before us, the learned Subordinate Judge held that the 1st defendant treated both the firms as the same firm in his accounts by mistake and that he committed this mistake without any motive.

Consequently, the 1st defendant had entered his payment of Rs. 3300/- under the khata of Alapati Ramamurty Gelli Krishnamurthy and Co., just as he had entered his liability for Rs. 5,840/10/0 under the same khata. The amount of Rs. 5840-10-0 was admittedly not due to that firm, but related to a transaction with the plaintiff firm. So far as the payment of Rs. 3300/- is concerned, the entry Ex. B-3 in the 1st defendant''s day-book mentioned it as a payment to Alapati Ramamurty Gelli Krishnamurthy i.e., the plaintiff firm. This entry was signed by Valiveti Seetharamayyar a clerk employed by both the firms. It could, therefore, have been a payment only to the plaintiff firm and the fact that the 1st defendant committed a mistake in carrying it into the ledger under the single head adopted by him for both the firms was immaterial. In this view, the learned Subordinate Judge held that the 1st defendant is entitled to be given credit for the payment of Rs. 3300/- and found that only the balance was due to the plaintiff.

We see no reason to differ from these conclusions of the learned Subordinate Judge. Sri. A. Triyambakam, the learned Counsel for the plaintiff, does not suggest that the 1st defendant stood to gain anything by claiming that the payment was to the plaintiff instead of to the other firm. As the 1st defendant made no distinction between the two firms in his accounts, no intention can be imputed to him as regards the payment having been to the one firm or to the other. The plaintiff''s clerk treated the payment as one made to the plaintiff by signing Ex. B-3. He undoubtedly knew that the two firms were different. The 1st defendant has now merely adopted the treatment by the plaintiff''s clerk of the payment and it is not urged that there is any valid ground for refusing to allow him to correct the mistake in his ledger.

Sri A. Triyambakam''s contention is that there was really no mistake in the 1st defendant''s ledger, so far as the entry relating to the payment of Rs. 3300/- is concerned. The basis for this contention is that the 1st defendant owed nothing to the plaintiff firm on 7-4-1946, but owed Rupees twenty eight thousand and odd on that date to Alapati Ramamurty Gelli Krishnamurty and Co., and would have made the payment only towards an existing liability. In order to substantiate these facts, the learned Counsel has filed a petition, C. M. P. No. 4510 of 1957 under S. 151 Civil Procedure Code, praying that the printed records in Appeal No. 7 of 1951 may be sent for and used as evidence.

The ground is that the same controversy (sic) garding the Rs. 3300/- was also an issue in Appeal No. 701 of 1951 and the parties to that appe(sic) consented to the issue being decided in the p(sic) sent Appeal, A. S. No. 523 of 1952. But t(sic) consent of the parties to the issue being decided in the present appeal does not mean that the also consented to import the evidence from the record in Appeal No. 701 of 1951. C. M. P. I 4510 of 1957 has clearly no merits and must dismissed.

In this connection, we may observe the Appeal No. 701 of 1951 was a defendant''s Appeal from the decision of the lower Court in S. No. 52 of 1949, on its file. That was a so for money filed by the present 1st defendant against the firm of Alapati Ramamurty Gelli Krishnamurty and Co. He did not include payment of Rs. 3300/- in his claim there a both O.S. No. 52 of 1949 and Appeal No. 701 1951 were disposed of without giving him cre(sic) for Rs. 3300/- as against the firm Alapati Ramamurty Gelli Krishnamurty and Co. It is as if the 1st defendant here has tried to credit twice over for a single payment of 3300/-.. In the judgment delivered by a Divis(sic) Bench of this Court in Appeal No. 701 of 1(sic) on 20-2-1957 (A) it was observed.

The plaintiff''s (i.e., the present 1st defendant''s) case is that this amount of Rs. 33(sic) was paid to the firm of Alapati Ramamurty and Gelli Krishnamurthy and not to the 1st defendant firm (i.e., Alapati Ramamurty and Gelli Krishnamurty and Co-) and that the plaintiff came to discover the mistake subsequent (sic) whereupon he made corrections in the accou(sic). The defendants'' version, on the other hand(sic) that the credit item of Rs. 3300/- represents amount that was actually paid to the defendant firm and that the plaintiff failed to ap(sic)priate the subsequent payments made by 1st defendant firm towards that amount. (sic) the parties agreed that the dispute in regar(sic) this item need not be decided in this case (sic) may be reserved for decision in Appeal No. (sic) of 1952 on the file of this Court and we ac(sic)ingly do so.

These observations which are relied upon by A. Triyambakam for the purpose of C. M. P. 4510 of 1957 lend no support for importing evidence from Appeal No. 701 of 1951.

Even assuming that the 1st defendant owed a large sum to the firm of Alapati Ramamurty Gelli Krishnamurty and Co., on 7-4-(sic) while he owed nothing on that date to the plaintiff firm, that would be of no avail to prov(sic) intention with which the 1st defendant the Rs. 3300/- and to negative the mistake p(sic)ed in regard to the entry in his ledger. We already observed that the 1st defendant maintaining a single account in his books both the firms and that no intention case imputed in the circumstances as to whethe payment was intended for the one firm o(sic) other. The plaintiff is bound by Ex. B-3 (sic) acknowledges the payment of the Rs. 3300 one made to the plaintiff. Therefore the an(sic) due to the plaintiff under the first head is(sic) the balance after giving credit to the pay(sic) of Rs. 3300/-.

However, the learned Sub-J. has (sic) that this balance together with interest (sic) he awarded at 12 per cent per annum till(sic) of the suit, amounted to Rs. 2863/-. Sri A rambakam points out that there is an arithmetical error and has filed a memo of calculation showing that the correct amount is Rs. 3121-8-0. On behalf of the 1st defendant, it is contended bat the plaintiff is not entitled to any interest. Jut the 1st defendant did not traverse in his written statement the plaintiffs claim for interest.

On the other hand, he calculated interest at bout six per cent per annum in admitting and depositing Rs. 2863/- as the amount due to the plaintiff. The plaintiffs evidence is that interest was payable at 12 per cent, per annum by (sic)e trade-custom. This evidence was not controverted nor rebutted by the defence. We therefore find that the amount due to the plaintiff under the first head up to the date of the suit is, Rs. 3121-8-0 and that the lower Court''s decree has to be modified accordingly. But the (sic)ithmetical error was not mentioned in the rounds of appeal, although it was covered by (sic)e valuation. In these circumstances, except (sic)r the above modification, Appeal No. 523 of (sic)52 is dismissed with costs.

In the appeals preferred by defendants 2 and 4, the dispute relates to the damages. (sic)r non-delivery, which has been decreed against (sic)em for Rs. 850/-, Rs. 850/-, Rs- 637-8-0 respectively inclusive of interest till the date of the it. The contracts of sale entered into between defendants 1, 2 and 4, who were the sellers and, are plaintiff, who was the buyer, are Exs. A-3, 4 and A-6 respectively. They are dated 4-4-(sic)16 at Vijayawada and are in similar terms, (sic)ng in printed forms with the necessary parti(sic)ars filled in. Exhibits A-3 and A-4 are each in respect of 1,20,000/- gunnies or 300 bales and (sic) A-6 is in respect of 90,000 gunnies of 225 (sic)es. The price fixed is Rs. 57-0-6 per 100 (sic)nies and payment is stipulated against the (sic)very order.

The place of delivery is specified as "F. O. Vizianagaram or F. O. Nellimerla Mill Sid(sic)" The time of delivery is specified as Janu(sic) to March 1947, at 100 bales monthly in Exs. and A-4 and at 75 bales monthly in Ex. A-6. note printed at the end reads "Terms and (sic)ditions as per Chittivalasa or Nellimarla (sic)e Mill Company," but neither party has sug(sic)ed that this has any bearing on the dispute.

At the time of the contracts, the plaintiff firm passed to each of the defendants a "stop(sic) letter, which began by mentioning the parti(sic)rs of the contract and proceeded thus :

We can accept those bales if you give Pucca(sic) very Order as mentioned in the contract If he other hand you do not give Pucca Delivery (sic)r we shall make a settlement according to Delivery Order. If you fail to do as men(sic)d above, we shall take towards our full its Rs. 2-8-0 (in words rupees two and annas (sic)t) per bale and shall give up the bales of Vayida on the date of the respective Vayida. Respect of that contract we shall not claim (damages) in any manner more than Rs. per bale.

(sic) first sentence extracted above says that the plaintiff was willing to treat constructive deli(sic) by means of Pucca delivery orders as de(sic) for the purpose of the contract. The (sic)ing of the second sentence has not been (sic)pted to be explained by the counsel on (sic) side before us. It obviously means, to (sic)ind, that if, as was in the contemplation (sic) parties, the defendants did not give pucca (sic)ry orders, the plaintiff and the defendants would settle their rights and liabilities on the basis of the prevailing prices of delivery orders as on the dates concerned. This furnishes a clue as to the real nature of the contracts.

But the defendants, for reasons best known to themselves, perhaps because, as indicated in the written statements of defendants 1 and 4, there were other similar transactions which resulted in their favour, have not raised a defence that the common intention was only to pay differences and we are, therefore, not concerned with that aspect of the matter. By the third and fourth sentences extracted above, the plaintiff agreed to limit his claim for damages for non-delivery to a maximum of Rs. 2-8-0 per bale. It is common ground that there was no performance on the part of the defendants by delivery. The plaint alleges that although the prevailing market prices were much higher, the plaintiff claimed the difference only at Rs. 2-8-0 per bale in conformity with the ''stop-loss'' letters. It is not disputed that if the plaintiff is entitled to damages, the measure of damages at Rs. 2-8-0 per bale is correct. The dispute confined to the question whether the plaintiff or the defendants committed default and this formed the subject matter of issues 2 and 6 framed at the trial.

The plaintiffs case is that as the defendants failed to deliver the goods within the times specified in the contracts, he has become entitled to damages. The defendants maintain that they did not deliver the goods, as the plaintiff did not apply for delivery which was obligatory upon him under S. 35 of the Indian Sale of Goods Act. It is common ground that the plaintiff did not ask for delivery. What we have therefore to consider is whether the agreement between the parties were such that there was no obligation on the plaintiff to apply for delivery.

Section 35 of the Indian Sale of Goods Act is in the following terms :

Apart from any express contract the seller of goods is not bound to deliver them until the buyer applies for delivery.

The language of the section clearly indicates that the provision is intended for the benefit of the seller. The seller may, if he chooses, deliver the goods without any application in that behalf by the buyer. But he is also entitled to wait until the buyer applies for delivery, unless he has contracted himself out of this right.

The provisions of S. 35 are similar to those of the repealed section 93 of the Indian Contract Act, which ran :

In the absence of any special promises, the seller of goods is not bound to deliver them until the buyer applies for delivery.

Referring to section 93, the Judicial Committee said in AIR 1935 67 (Privy Council) :

Although part VII of the Contract Act, which included this section, has since been repealed by the Sale of Goods Act (Act III of 1930) the section reappears as section 35 of the latter Act but with substitution of the words "apart from any express contract" for the words "in the absence of any special promise."

It is important to observe that section 93 applies unless there is a "special promise," which, in their Lordships'' opinion indicates an express stipulation as to delivery which relieves the buyer from the obligation to apply for delivery, or the necessary implication of such a stipulation from the nature of the contract as expressed. It might also arise out of usage or custom of trade.

The only difference in the meaning on account of the difference in the wording of the opening clause of section 35 as compared with S. 93, is that implied stipulations are excluded. Section 9 of the Contract Act says that an "express promise" is a promise made in words and that a promise conveyed otherwise than by words is an "implied promise." Thus an "express contract" means the reciprocal promises contained in the words of the contract or resulting from a true construction of them and excludes stipulations which may arise out of any usage or custom or which may be inferred from the conduct or course of dealings between the parties.

Section 35 imports into all contracts of sale of goods, a term that the seller is not bound to deliver the goods until the buyer applies for delivery, which may be negatived only by the actual words used in the bargain between them or a true construction of those words. Here the contracts of sale and the "stop-loss" letters did not explicitly say anything about the buyer''s application for delivery. The question for consideration is whether a correct construction of them results in relieving the buyer of his obligation in that respect.

For this purpose, it is necessary to clear the ground by determining the exact nature of the obligations of the parties under their bargain. The contracts were for the sale of goods by description and were executory. Although the time and place of delivery were fixed under Exs. A-3, A-4 and A-6, payment was stipulated against delivery order. Under S. 32 of the Sale of Goods Act.

Unless, otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer shall be ready and willing to pay the price in exchange for possession of the goods.

Here the parties have expressly agreed that the price would be paid concurrently with the delivery of the goods. Therefore the obligation of the defendants did not extend beyond being ready and willing to give actual or constructive delivery of the goods to the plaintiff in exchange for the price. The position is stated by Benjamin in his Treatise on the Law of Sale of Personal Property (eighth edition) at page 600 thus :

The general rule is executory agreements for the sale of goods is that the obligation of the seller to deliver and that of the buyer to pay are implied concurrent conditions in the nature of mutual conditions precedent, and that neither can enforce the contract against the other without showing performance, or offer to perform, or averring readiness and willingness to perform his own promise. And the words "ready and willing" imply not only the disposition, but the capacity to do the Act.

As observed in the case of G.K. Chengravelu Chetti and Sons. Vs. Akarapu Venkanna and Sons,

The plaintiff if he happens to be a buyer must allege and prove that he was ready and willing to pay for the goods and likewise if the seller be the plaintiff, he must allege and prove that he was ready and willing to deliver the goods.

It seems that under the English Law, in an action for non-delivery the buyer need not give evidence that he was ready and willing to pay till the seller shows that he was ready to deliver and the averment of the plaintiff''s readiness and willingness to perform his part of the contract will be proved by showing that he called on the defendant to accomplish his part. (See the commentary at page 403 of The Indian Sale of Good Act by Om Prakash Aggarwala, Fourth edition, 1955.) Under the Indian Law, there is statutory obligation on the buyer to call upon the seller to perform delivery and'' in the case (sic) an excutory contract, unless it can be said other wise from the words thereof, the buyer must no only be ready and willing to perform his pa(sic) of the contract but must also have applied fo(sic) delivery before he can charge the seller writ(sic) non-delivery. In the case of Dinkerrai Lalit Kumar Vs. Sukhdayal Rambilas, Chagl(sic) J., as he then was, observed :

When a buyer sues a seller for damage for non-delivery application for delivery on h(sic) part is a part of the cause of action and mu(sic) be explicitly stated.

In the present case, there is no averment in t(sic) plaint about the plaintiff''s readiness and wi(sic)ingness to pay for the goods and much less abo(sic) any application for delivery on his part or abc(sic) its having been dispensed with. The plaint proceeds as if under the contracts there was an (sic) conditional obligation on the defendants to (sic)liver the goods within the times stipulated. (sic) as a matter of fact, their obligation was subject to the condition that the plaintiff paid or t(sic)dered the price. The short answer that may given for the plaintiff''s claim for damages that his plaint does not disclose a cause of (sic)tion for the same nor is it established by evidence.

No doubt the defendants have not specifically pleaded that the plaintiff was not re(sic) and willing to pay the price in exchange delivery. But they say that they were under obligation to deliver the goods as the plaintiff did not apply for delivery. Now, if there been an effective application for delivery on part, it would have naturally indicated that was ready and willing to pay the price and form his part of the contract. Hence it ca(sic) be inferred from the pleadings that there no dispute as to the plaintiff''s readiness willingness to pay the price.

Coming to the construction of the tract between the parties, it is contended all the particulars necessary for effecting very, such as the time and place, are expr(sic) stated in the contracts and no purpose could (sic) been possibly served by an application for del(sic) on the part of the plaintiff and that it w(sic) have been an idle formality. It is also conte(sic) that it is the duty of the seller u/s of the Sale of Goods Act, to deliver the g(sic) in accordance with the contract of sale an(sic) the contracts expressly fixed the time for delivery it would be unreasonable to allow to invoke section 35 so as to relieve him o(sic) duty under the contract.

On these grounds, it is argued that th(sic) press contracts here are inconsistent with (sic) buyer being left with an obligation to appl(sic) deliver. In our view, the answer to the contention is that the plaintiff''s application delivery would have served! the purpose (sic) prising the defendants that the plaintiff ready and willing to pay the price. This condition precedent to delivery by the defendants, the answer to the second contention is that the (sic)uty of the defendants were merely to be ready nd willing to give delivery against payment on (sic)e dates fixed, but the plaintiff now seeks to (sic)ddle them with the additional duty of performing or tendering delivery.

In the case of M.P.V. Sundararama Iyer and Company Vs. V.V.C.R. Murugesa Mudaliar, the contract was for the sale of certain (sic)antity of yarn, which had to be delivered at (sic)e seller''s godown at the seller''s option between (sic)e first and the last day of October, 1943, upon payment of the price by the buyer. Clause 4 of (sic)e contract provided that if the buyer failed take delivery as required by the seller''s notice, (sic) seller was entitled to sell the goods at the (sic)yer''s risk. The learned Judges construed this (sic)use as meaning that the buyer must take delivery in accordance with the seller''s requirements on any day of the delivery month and therefore amounting to an express contract completed in. section 35.

They accordingly held that the expression seller''s option" meant that the seller should (sic)st intimate the buyer of the availability of the (sic)ds and the readiness to deliver and until (sic) seller exercised that option, the buyer can (sic) do anything or apply for delivery. As the (sic)er did not send such an intimation before the (sic) of October, they held that there had been, breach on the part of the buyer.

The decision has no application to the condition of the contracts here, because they con(sic) no terms indicating that the seller has to (sic)e the initiative in respect of the performance the contracts. No doubt P.W. 1 asserts that (sic)er the terms of the contracts, the sellers had (sic)ntimate that they were ready to deliver, but (sic) is not borne out by anything in Exs. A-3, and A-6 and the ''stop-loss'' letter.

The learned Subordinate Judge has given any definite reason for holding that (sic)e was no obligation on the part of the plain(sic) to demand delivery. He seems to have (sic)ight that simply because the ''stop-loss'' letters (sic)ided for the plaintiff accepting damages in of delivery, the plaintiff could ask for dama(sic) without demanding delivery. But the plain(sic) right to recover damages depended upon (sic)ther the defendants wrongfully neglected or (sic)sed to deliver the goods. There was no such(sic)ult on their part, because they were entitled (sic)ait for the plaintiffs application for delivery, (sic)h was never made. We.do not find any(sic)g in the words of the ''stop-loss'' letters which (sic)d warrant the conclusion that they are in(sic)istent with the buyer having to apply for (sic)ery.

It follows that the contracts here can, by means be construed as relieving the plaintiff is obligation to apply for delivery. As the plaintiff admittedly did not apply for delivery, as no cause of action for claiming damages, defendants were not bound to deliver until plaintiff made an effective application for (sic)ery and in the absence of any such application they cannot be held liable for non-delivery.

In this view, it is not necessary for (sic) consider the further point taken by the (sic)dants that the plaintiff is not entitled to (sic)est on the amounts of damages from the (sic)d dates of default until the date of the Appeal Nos. 833 and 973 are allowed with.

In the result, the lower court''s decree as against defendants 1, 2 and 4 will be modified by decreeing the suit for Rs. 3121-8-0 with proportionate costs and subsequent interest at six per cent. per annum against the 1st defendant and dismissing the suit with costs as against defendants 2 and 4. The defendants will be entitled to their costs in these appeals.